Australia's Incitec Pivot green lights $850m US ammonia plant

17 April 2013 11:09[Source: ICIS news]

LONDON (ICIS)--Australian fertilizer producer Incitec Pivot (IPL) announced on Wednesday its board of directors have given the green light to an $850m (€646m) ammonia manufacturing plant on the banks of the Mississippi in Louisiana, US.

Scheduled to commence production in the third quarter of 2016, the plant will produce 800,000 tonnes/year of ammonia, of which 300,000 tonnes/year will go to major international trader Transammonia (Trammo) after the pair agreed an offtake agreement.

Group subsidiary Dyno Nobel America will receive 300,000 tonnes/year from the brownfield site at Waggaman, while the remaining 200,000 tonnes/year will go to Cornerstone Chemicals Company, on whose land the new plant will be situated.

In a statement, IPL said subsidiary Dyno Nobel Louisiana Ammonia has entered into a contract with US-based KBR for the engineering, procurement and construction of the plant, which will also include a licence of KBR's ammonia technology.

Melbourne-headquartered IPL, which launched a major feasibility study into the potential project last year, said the facility will be funded by "debt facilities and internally-generated cash flows".

IPL managing director and CEO, James Fazzino, added that the project met the company's strict investment hurdles, with compelling financial metrics, a payback of less than five years and a 15% internal rate of return.

He said: "Two years ago, IPL identified the unique opportunity to capitalise on a potential investment in the US through a brownfield site, competitively-priced energy, labour productivity and responsive regulatory environment.

"This project leverages the ‘one-off’ benefits of the brownfield site, utilising existing infrastructure, including ammonia logistics and access to the US ammonia market.

“The plant will sit in the bottom quartile of the global cost curve and takes our US business – and potential future ammonium nitrate expansions – back to US gas economics."

"This is a unique set of factors that allows IPL to grow its international business and strengthens our presence in one of the world’s largest economies," he concluded.